Canadian Securities Course (CSC) Level 2 Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

The systematic withdrawal method allows investors to withdraw a fixed percentage of their mutual fund investment on a regular basis, typically annually. This approach is particularly beneficial for those seeking to create a steady income stream from their investments. By withdrawing a percentage, the amount taken out can adjust with the value of the investment, potentially providing a more balanced approach to income generation. This method considers market fluctuations, allowing investors to maintain their capital while drawing income.

Investors appreciate this approach because it can help manage longevity risk, where an individual may outlive their savings. By consistently withdrawing a percentage rather than a fixed dollar amount or relying solely on time-based withdrawals, the investor may mitigate the risk of depleting their resources too quickly during market downturns.

Other methods, such as fixed dollar withdrawals, provide a set amount regardless of the mutual fund's performance, which could risk exhausting funds in poor market conditions. The ratio withdrawal term is less commonly used and typically does not imply a steady or consistent income over time. Similarly, fixed period withdrawals might lock the investor into a predetermined schedule that doesn’t account for fluctuations in their investment's value, potentially leading to an unsustainable income.